Now that the ink is starting to dry on the extension of the Bush Era tax cuts it is up to the rest of us to figure out what just happened, and what does it mean to our clients? The dust is still settling, but one thing is perfectly clear: our clients are still facing a great deal of uncertainty, and this extension is essentially meaningless to anyone trying to plan for the long term.

The challenge is how do we as advisors manage this situation and give our clients solid guidance on the topic?

Easy - Tell them to stop relying on the government to dictate their planning. Seriously, why would we let these people who can't seem to come to any kind of workable long term solution play such a large role in planning our financial future? It's just silly. Even with this new extension, there is no way we can tell a client with any certainty what the exemption will be when they pass away!

Despite all of the challenges (a moving target for the exemption amount, sunset of the legislation in two years, etc.) there are significant opportunities for the savvy advisor and their clients in this package. Consider the following:

• Is there any benefit to individuals who don't happen to pass away in the next two years?
• What is the significance of the re-unification of the Gift and Estate Tax Exemptions?
• What happens to financial underwriting for estate planning at the carrier level?
• What happens to financial underwriting for estate planning at the reinsurer level?
• With the projected number of taxable estates now at approximately 3600, is estate planning essentially a dead end for the insurance professional?
• What should clients be doing now to position themselves for a future repeal or reduction of the $5 mil exemption?

Big questions, and the answers just may surprise you as we tackle them in the coming weeks.

My last point for the day is this - If the current environment proves anything, it is that current law is just that - current law - and a client hoping that it will still be in place when they pass away is delusional. Having some tax-free, liquid cash will never, ever, be a negative. It's time to take the control of this issue away from our government and place it back where it belongs - with the client and their advisors.

For more information about The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, take a look at Tom Kestler's article from the December 28, 2010 edition of the Kestler Connection newsletter.

Stay tuned for specific ideas in the coming weeks!